Is it really Compulsory to have Turkish for Contracts in the Aviation and Logistics Sector?
Is it really Compulsory to have Turkish for Contracts in the Aviation and Logistics Sector?
There is a law which has been in force for many years and has stood the test of time; “Law No. 805 on the Compulsory Use of Turkish in Economic Enterprises”. It was published in the early days of the Republic in the Official Gazette dated April 22, 1926 (the “Law No. 805” or the “Law”) and entered into force on the same day and consists of 9 articles.
Although it is a short law, it has been applied by the courts since 1926 and it application may affect the validity of legal contracts if parties are Turkish and even where one of the parties is a foreigner. So, what is this law and how does it lead to invalid contracts and wrong practice in the sector; let me try to explain with the specific text of the Law No.805.
Article 1 of Law No. 805 reads as follow ; “All kinds of Turkish companies and institutions, located in Turkey carrying out all kind of transactions, contracts, correspondence, books and are obliged to keep their legal records in Turkish.”, Article 2 of the Law says, “For foreign companies and institutions, this obligation is reserved for communication, interaction and contacts with the Turkish institution and contacts with the Turkish establishment and the people who are citizens of Turkey, and to the legal documents and books that they are obliged to submit to State entities.”
In Article 3; “In the second article, although companies and establishments may additionally use a language other than Turkish in transactions, the main language is Turkish and a Turkish text must be signed. Where this is the case, even if the signature is under the part or copy written in the other language, the Turkish text is valid.” And in article 4; “The documents and documents issued in contradiction to the first and second articles of this law after the implementation of the law are not taken into consideration in favour of companies and institutions.”
Because of the wide scope of these statements, some courts have ruled that a contract between a foreign company and a Turkish company will not be valid in the absence of a Turkish copy of the contract. Now as a matter of fact, it is well known that, almost all of the contracts made today, especially in the logistics and air transportation sector, are made in English. Therefore if the courts decide that foreign language contracts would not be valid, this will lead to confusion in the sector. For example, the decision of the Sakarya Regional Court of Appeals below is one of the decisions that could add to such confusion.
“As a rule, in this case (pursuant to Article 2 of the Turkish Civil Code); Although the contract may be binding between the parties in matters that do not concern public order, the “authorization clause” in a contract of this nature will not be valid, since contracts that are not in Turkish, but are submitted to the Turkish authorities and / or applied in Turkey are not valid (in matters of public order).”
(Sakarya Regional Court of Justice 7th Civil Chamber Merits No. 2019/1402, Decree no. 2020/322 D. 26/02/2020). Indeed, the decision of the 11. Civil Chamber of the Supreme Court, Merits no. 2012/3122 Decree no. 2012/4073 D. 16/03/2012, Merits no. 2014/1385 Decree n. 2014/3815 are also concluded on the same basis.
Some argue that such decisions puts an obligation on foreign companies and Turkish companies to sign contracts in Turkish. However, given the global nature of business in these days and the fact that English has become the main language for international business, such a requirement shows that this Law and the courts, is completely out of step with the realities of commercial life in 2023.
Quite simply this Law No. 805 dating from 1926 does not fit with today’s fast paced business environment.
In our country, which was a young republic at that the time, efforts to popularize Turkish were ongoing and Law No. 805 was a product of these efforts. It is also impossible to compare the international commercial mobility of that period with today’s commercial mobility. In the light of this information, it is obvious that the Law has been left behind. Therefore, just as it was necessary to enact Law No. 805 at that time, it would seem that the time has come for it to be updated. At least with respect to contracts where one party is a foreign entity.
Such a change with meet expectations of foreign companies planning to invest to Turkey today, which is a predictable and secure investment environment. In an age where English is almost the lingua franca of commerce in a globalizing world, it is not a reasonable and acceptable approach to insist that contracts must be signed in Turkish, or even to accept that a contract is invalid if it is not signed in Turkish.
There is however a difference on opinion in the legal doctrinal opinion, which we also note. That is, it can be noted that the legislator includes both the terms “transaction” and “contract” in Article 1, but only included the term “transaction” in Article 2. This is argued clearly shows that the legislator did not intend to include “contracts” within the scope of Article 2. It is unlikely that the difference between the texts of two articles regulating the same subject matter can be explained in any other way.
In this context, if one of the parties to the contract is a foreigner, it should be accepted that there is no obligation to use Turkish in the contract to be signed, taking into account that the term “contract” is not included in Article 2.
Indeed supporting this view, the 12th Civil Chamber of the Istanbul District Court of Appeal accepted this defence in its decision dated 26.12.2019 and numbered 2019/2337 E. 2019/1639 K and stated in the relevant decision:
“On the other hand, the plaintiff party relies on Article 1 of the Law No. 805 on the Compulsory Use of Turkish in Economic Enterprises and argues that the arbitration agreement made in a foreign language is invalid. According to Article 1 of Law No. 805, “All kinds of companies and institutions of Turkish nationality are obliged to keep all kinds of transactions, contracts, correspondence, accounts and books within Turkey in Turkish”.
According to Article 2 of the aforementioned Law, for foreign companies and institutions, the obligation to write in Turkish is limited to their communications and transactions with Turkish institutions and persons of Turkish nationality, and the documents and books they are obliged to submit to state institutions.
When we return to the case in point, since one of the parties to the contract containing the arbitration clause is a foreign company, it is concluded that Article 1 of Law No. 805 does not have the possibility of application, and the plaintiff’s objection in this regard is not deemed appropriate”.
Likewise, in a similar case in which we acted and we made the same point, our objections were accepted. This can be found in the decision of the 12th Civil Chamber of the Istanbul District Court of Appeal; Merits no. 2020/19 , Decision no. 2020/184, D. 13.02.2020, in the decision Merits no. 2019/2338, Decision no. 2019/1649, D. 26.12.2019 and in the decision Merits no. 2019/2336 E., Decision no. 2019/1638, D. 26.12.2019, and it was stated that Article 1 of the Law No. 805 would not be applicable due to the fact that one of the parties is a foreign company, and these decisions were also approved by the Supreme Court.
Although the decisions of the Istanbul District Court of Appeal are more in line with the realities of current commercial life, it should not be forgotten that different interpretations of the Law may lead to erroneous decisions, as can be seen from the decisions we have given examples.
In order to create a safer commercial environment in the sector, the confusing parts of the Law No. 805 should be repealed, or the Supreme Court should issue a decision on the unification of conflicting judgments on this issue.
Att. Yasemin Akdeniz
